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ChargeSmart, a three-year-old startup, facilitates mortgage, utilities, auto or student loan payments by credit card, positioning themselves as an online intermediary between the customer and lender. For a fee – a flat rate that depends on the merchant receiving the payment – ChargeSmart gives the convenience of paying with credit or debit cards. But is it really such a great deal for consumers?

ChargeSmart’s argument: pay with plastic, get rewards

ChargeSmart certainly seems to think that the additional fee is worth it. Bruce Cundiff of Javelin Strategy & Research believes that consumers’ desire to earn rewards will trump ChargeSmart’s transaction fee, making the startup’s client base rewards-seekers rather than credit risks. "I'm banking their model is people who can afford to put [these payments] on a credit card, not people who are looking for a financing solution.”

Because ChargeSmart’s transaction fee depends on who receives the bill, whether or not it is cost-effective depends on the cardholder and the recipient. For example, ChargeSmart levies a flat fee of $3.95-$6.50 (usually around $5) on utilities payments. Assuming a consolidated gas and electric bill of $100-200 per month (an unscientific estimate, admittedly), ChargeSmart’s markup is probably between 2.5% and 5% of the transaction – a substantial chunk of change.

Do the math first - the rewards may not add up

Only rarely does ChargeSmart’s fee make paying with a credit card just for rewards a good idea, and you’ll need to do some research beforehand.

ChargeSmart has a flat fee for Bank of America mortgages: $14.95, almost 1.5% of a $1,000 payment. Even with a rewards rate of 2% – a rate seen only in a few cards like theCapital One Venture Rewards cardorDiscover Escape– you’ll still only get about a Venti Frappuchino in rewards each month. Of course, the rewards will be larger if you have a larger mortgage payment.

Also, if you have a mortgage or other large, recurring payment that you can pre-pay without any penalties, the rewards could add up. Of course, this assumes that you have a chunk of cash on hand, burning a whole in your pocket. But if you just received a windfall and are going to use it to pay down debt, ChargeSmart could net you some real rewards.

What about convenience?

You could argue – and ChargeSmart does – that the extra fee is worth the convenience of paying online rather than sending a check in the mail. But with online bill payments, you can simply link your checking account to a mortgage, utility bill, or student loan, and see the monthly payment deducted from your account without any fees or really any effort on your part. Online credit card payment doesn’t add any convenience, and the benefit to those lucky rewards cardholders who don’t tend to carry a balance is minimal.

Debt deferment as another option

One area where a credit card payment may be helpful is if you’re facing a temporary setback and can’t immediately make your loan payments. If you believe with some degree of certainty that you’ll be able to meet your obligations in the future, you can essentially defer a payment with a 0% introductory purchase APR card. It goes like this: you get your card and use it to pay your $1,000 mortgage payment plus ChargeSmart’s flat fee.

You can then defer that payment and any subsequent payments for a total of a year (or six months, or eighteen, or whatever the promotional period is) before the regular APR kicks in, so you can spread your payments out to better fit your income situation. If you expect an increase in income that will make your payments more manageable, it might be in your best interest to put off paying the full charges.

But this isn't an option I would recommend. If you’re going this route, you should take a good look at your finances and spending habits. Why can you not make this payment right now? Will you need to alter your lifestyle to meet your obligations in the future? Ask yourself, and answer honestly, whether you’ve got your finances in order and are hit with unfortunate circumstances or if this is a problem that will continue to crop up.